Baseline study two:

Mukungwe artisanal mine, South

Kivu, Democratic Republic of Congo

Gregory Mthembu-Salter, Phuzumoya Consulting

November 2014

1
About the OECD
The OECD is a forum in which governments compare and exchange policy experiences,
identify good practices in light of emerging challenges, and promote decisions and
recommendations to produce better policies for better lives. The OECD’s mission is to
promote policies that improve economic and social well-being of people around the world.

About the OECD Due Diligence Guidance

The OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-
Affected and High-Risk Areas (OECD Due Diligence Guidance) provides detailed
recommendations to help companies respect human rights and avoid contributing to conflict
through their mineral purchasing decisions and practices. The OECD Due Diligence Guidance
is for use by any company potentially sourcing minerals or metals from conflict-affected and
high-risk areas.
It is one of the only international frameworks available to help companies meet their due
diligence reporting requirements.

About this study

This baseline study is the second of five studies intended to identify and assess potential
traceable “conflict-free” supply chains of artisanally-mined gold and to identify the
challenges to implementation of supply chain due diligence. The study was carried out in
Mukungwe, South Kivu, Democratic Republic of Congo.
This study serves as background material for the 8th ICGLR-OECD-UN GoE Forum on
Responsible Mineral Supply Chains taking place in Kinshasa on 3-5 November 2014. It was
prepared by Gregory Mthembu-Salter of Phuzumoya Consulting, working as a consultant for
the OECD Secretariat, with research assistance from Nadine Lusi.

For more information visit: mneguidelines.oecd.org/mining.htm

© OECD 2014
This study should not be reported as representing the official views of the OECD or of its member
countries. The opinions expressed and arguments employed are those of the authors. It describes
preliminary results or research in progress by the author(s) and is published to stimulate discussion on a
broad range of issues on which the OECD works. Comments are welcomed, and may be sent to the
Directorate of Financial and Enterprise Affairs, OECD, 2 rue André-Pascal, 75775 Paris Cedex 16,
France.
This document and any map included herein are without prejudice to the status of or sovereignty over
any territory, to the delimitation of international frontiers and boundaries and to the name of any territory,
city or area.
 Baseline study two:

Mukungwe artisanal gold mine,

South Kivu, Democratic Republic of
Congo
 Table of contents

Acronyms ........................................................................................................................ 6

I. Introduction and key findings.................................................................................... 7

II. Overview of gold mining in South Kivu Province ...................................................... 10

Companies active in South Kivu Province ........................................................................ 11

Types of mining, production volumes and formalisation levels ...................................... 13
The gold supply chain in South Kivu: from mine to export ............................................. 14
III. Mukungwe case study ............................................................................................ 17

Type of mining, production volume and formalisation levels ......................................... 18

History of the mine .......................................................................................................... 20
IV. Conflict links and other Annex II risks ...................................................................... 22

Direct or indirect support to the FARDC and non-state armed groups ........................... 22
Serious abuses associated with extraction, transport, and trade of minerals ................ 24
Bribery and fraudulent misrepresentation of the origins of minerals ............................ 25
Money laundering, payment of taxes, fees and royalties ............................................... 26
V. Awareness and levels of implementation of the OECD Due Diligence Guidance ........ 27

Initiatives to mitigate Annex II risks................................................................................. 27

VI. Conclusion and recommendations: Industrial and artisanal gold mining in eastern
DRC – conflict, co-habitation or cooperation? .......................................................... 31

Recommendations ........................................................................................................... 32
Annex: Recent conflict and conflict resolution at Mukungwe .......................................... 33

Bibliography .................................................................................................................. 36

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 Acronyms

ANR Agence Nationale des Renseignements

CAMI Cadastre Minier
CEEC Centre d’Evaluation, d’Expertise et de Certification des substances minérales
précieuses et semi-précieuses
CPS Comité Provincial de Suivi
CTCPM Cellule Technique de Coordination et de Planification Minière
DGDA Direction Générale des Douanes et Accises
DGM Direction Générale de Migration
DGRAD Direction Générale des Recettes Administratives
FARDC Forces Armées de la République du Congo
FAZ Forces Armées Zaïrois
FDLR Forces Démocratiques de Libération du Rwanda
ICGLR International Conference on the Great Lakes Region
IOM International Organisation for Migration
MONUSCO Mission de l’Organisation des Nations Unies pour la Stabilisation en RD
Congo
OCC Office Congolais de Contrôle
OGP Observatoire Gouvernance et Paix
PNC Police Nationale Congolaise
RCD Rassemblement Congolais pour la Démocratie
RCM Regional Certification Mechanism
SAESSCAM Service d’Assistance et Encadrement du Small Scale Mining
SAKIMA Société Aurifère et Industrielle du Kivu et du Maniema
SOFEDI Solidarité des Femmes pour le Développement Intégral
SOMICO Société Minière du Congo
SOMINKI Société Minière et Industrielle du Kivu
ZEA Zones d’Exploitation Artisanale

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I. Introduction and key findings

1. The contribution of gold to official tax revenues is far lower than it should be.

South Kivu Province has some of the Democratic Republic of Congo (DRC)’s richest mineral
deposits and the gold mined there makes a vital contribution to the province’s economy.
Provincial and national tax revenues from mining have risen since industrial gold output
started in 2011 from Toronto-listed Banro Corporation, the only active large-scale mining
operation in the Province, and because of an increase in recorded gold exports from Bukavu-
based unités de traitement1. However, the contribution of gold to the government’s tax take
in South Kivu is limited, for two reasons. The first is that though artisanal gold production
and trade in the province is subject to numerous semi-legal and illegal levies by state
employees, almost none of this ends up in state coffers. The second is that so much
artisanally mined gold from the province is still smuggled from the country, usually to
Uganda, but also to Kenya, Rwanda and Burundi, and from there allegedly to Dubai.

2. Unités de traitement lack sufficient legitimate sources of gold supply and suffer from
unfair competition from smugglers.

Reduced export taxes on gold have encouraged the establishment of officially registered
gold unités de traitement in South Kivu and other provinces. But the unités de traitement in
Bukavu have complained of a huge shortage of gold mines validated2 – let alone validated
‘green’ - by a multi-stakeholder evaluation team from which they could therefore legally
buy. The unités de traitement have also alleged unfair competition from gold traders who
neither declare their gold purchases nor their exports.

3. There is little awareness or knowledge of the OECD Due Diligence Guidance among
gold traders in Bukavu. Industrial miners are better informed and are changing their
approach to artisanal miners.

Knowledge or even awareness of the OECD Due Diligence Guidance for Responsible Supply
Chains of Minerals from Conflict-Affected and High-Risk Areas3 among gold traders in
Bukavu ranges between minimal and non-existent, in contrast to the city’s tin and tantalum
trading houses, which have received numerous trainings on the subject. Banro
representatives are well versed in the OECD Due Diligence Guidance, and the company has a
range of checks and balances in place intended to maintain the integrity of its chain-of-
custody.

Banro’s approach to artisanal miners has evolved over the years, from a starting position of
the full enforcement of the company’s rights to permits to one that tries to accommodate

1 These are still often called comptoirs, but their official name has changed to unités de traitement since the
introduction by the government of a requirement that all minerals be processed to some degree within the
DRC prior to export.
2 Validation is the process by which teams comprised of representatives of a range of natural resource
governance stakeholders audit mine sites to evaluate, inter alia, whether they generate conflict financing.
3 Hereafter referred to as the OECD Due Diligence Guidance. For the second edition of the OECD Due Diligence
Guidance, see www.oecd.org/investment/mne/GuidanceEdition2.pdf.

7
the desire of artisanal miners to continue digging for a living. Casa Minerals, operating in the
south of the province, has agreed to cede half its permits to artisanal diggers in return for
artisanals vacating the remaining portions.

4. Despite efforts at mitigation, South Kivu artisanal and small-scale gold mining is still
an important source of conflict financing.

As has often been observed, artisanal gold production in South Kivu is and has at least since
the 1990s been an important source of conflict financing for the Congolese armed forces
and a range of non-state armed groups. South Kivu’s artisanal gold mines have also
feathered the nests of many of the province’s politicians and senior state officials, and have
benefited numerous national figures in far-away Kinshasa.

The militarisation of South Kivu’s gold mines has over the years resulted in many serious
abuses associated with gold’s extraction, transport and trade, including killings, the driving
of people from their homes, slave labour, torture and illegal detention, to the point where
identifying ‘green’ artisanal gold mines in the province has become a major challenge.

The provincial authorities have taken steps to address conflict financing from artisanal gold
and other Annex II risks4, including the establishment of a multi-stakeholder committee
called the Comité Provincial de Suivi (CPS) on the artisanal mining sector. The South Kivu CPS
is chaired monthly by provincial minister of mines Adalbert Murhi Mubalama, and is
intended to monitor developments in the artisanal sector and deal promptly with problems
as they arise.

5. Progress is possible: Initiatives taken by civil society, provincial and local authorities,
for example, have led to the demilitarisation of the Munkungwe mine and have
advanced the reconciliation of its warring stakeholders.

Mukungwe is a large artisanally-mined gold deposit in South Kivu on a concession of Banro

Corporation. The OGP has facilitated workshops for the South Kivu Forces Armées de la
République du Congo (FARDC) that have been followed by a military pull-out from
Mukungwe. The OGP has further facilitated multi-stakeholder dialogues concerning
Mukungwe which have gone some way towards addressing and resolving the causes of
violent disputes there. (See III. Mukungwe case study).

4 Other OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict Affected and
High-Risk Areas - Annex II risks include child labour, the fraudulent misrepresentation of the origin of
minerals, money laundering and bribery.

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6. The government wants artisanal diggers on industrial exploitation permits to relocate
to new artisanal mines, but there has been little consideration to date of the
“SOMINKI option” – leaving diggers where they are and permit holders buying from
them.

The official policy of the provincial and national authorities is that artisanal diggers working
on the permits of industrial mining companies should relocate to Zones d’Exploitation
Artisanal (ZEA) and mine there instead. This is set to happen at Banro’s Namoya site, which
is 225 kilometres southwest of Bukavu, just within the borders of Maniema province, where
artisanal miners are supposed to relocate to nearby Matete to mine gold, and production is
scheduled to start there in late 2014. Relocation to a ZEA is also the authorities’ preferred
solution at Mukungwe, a large artisanal gold mine with ‘red’ status that lies on Banro’s
permit 43, which is the subject of a case study in this report. Yet, as the case study shows, it
is by no means certain that a suitable ZEA can be found there. One option that has not been
tried, however, is for the diggers to stay put and for Banro to facilitate, supervise and
support their gold production and/or possibly to buy the resulting output. This was how the
old Societé Minière et Industrielle du Kivu (SOMINKI) typically operated in South Kivu, though
today this arrangement could only be considered at Mukungwe if the site were demilitarised
and officially re-validated as ‘green’. In addition, Banro stated that a higher level of
confidence would need to have been forged around validated, well-monitored and
entrenched traceability measures for gold.

9
II. Overview of gold mining in South Kivu Province

The province of South Kivu has been generously endowed with gold deposits. Almost all
these many deposits are mined by artisanal diggers, in numbers in any given site varying
from a handful to thousands. The main clusters of mined gold deposits in South Kivu are:

 Southwest of the provincial capital Bukavu, in Walungu and Mwenga territories,

including Mukungwe;
 West of Baraka, in Fizi territory, including sites such as Butende and Michikachika;
 Southeast of Lubi, also in Fizi territory, including sites such as Israel and Masumu;
 Near the North Kivu border, in Kalehe territory, including sites such as Kairenge and
Kitendebwa; and
 In the west of the province towards Maniema, in Shabunda territory, with sites
including Kalanda and Kalutindi.

Figure 1. Screen shot of IPIS map showing locations of gold mines in South Kivu

During the country’s colonial era, after independence and until the early 1990s, a small
number of these gold deposits were exploited semi-industrially by European private
companies, such as the Minière des Grands Lacs (MGL). These companies amalgamated with
tin, wolfram and colombo tantalite (coltan) mining firms in 1976 to become SOMINKI.
Private shareholders held 72% of the new company, and the Zaïrean state the remaining
28% stake. The main SOMINKI gold mine was Mobale, near Kamituga, 100 kilometres south
west of Bukavu, but there were other sites too, and the company reportedly also bought
gold from artisanal diggers.5

Available evidence suggests that there was only a limited involvement of civilian state
officials and the military in artisanal gold mining in South Kivu during the Mobutu era.
Several respondents interviewed for this study said that the Forces Armées Zaïrois (FAZ) had
generally not been present at mine sites and had not systematically taxed routes between

5 Author’s interviews with ex-SOMINKI employees, Kalima, 2009.

10
the sites and urban centres. 6 There is anecdotal evidence, however, that some FAZ
commanders had financial interests in some gold mines. Police were also reported to be
absent from most South Kivu gold mines, though SOMINKI reportedly deployed a small
private security force at Mobale.

There is an extensive post-independence tradition in South Kivu of rebel militia deriving

financing from illicit gold trading which continues to this day. Former President Laurent
Désiré Kabila smuggled South Kivu gold across Lake Tanganyika to Tanzania when he was a
rebel fighter during the 1960s and 1970s7, and groups like Mai Mai Yakutumba do much the
same today.8 Even where non-state militia have not been involved in mineral supply chains,
the dominant trend in South Kivu, as in other gold producing provinces in the DRC, has been
for nearly all artisanally-produced gold to leave the country unofficially and unrecorded.

Since 2006, successive UN Groups of Experts on the DRC have identified artisanal mining in
South Kivu, particularly for gold, as a significant source of conflict financing. A nine month
ban on artisanal mining in Maniema, North and South Kivu, imposed by President Joseph
Kabila in September 2010 to tackle the issue of conflict financing, plus the decision of some
international companies to stop sourcing from the DRC rather than to report on their
activities, as required by Section 1502 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act9 had a significant impact on cassiterite and coltan mining in South Kivu,
contributing to a marked reduction in output and trade, but barely touched the artisanal
gold sector, where production and trade appear to have continued much as before.

Companies active in South Kivu Province

During the late 1980s SOMINKI began losing money and slid towards bankruptcy, principally
because of a falling international tin price.10 SOMINKI’s output of all metal ores shrank
steadily, and as it abandoned semi-industrial mining at site after site the company’s
presence was replaced by growing numbers of artisanal diggers. In 1995, SOMINKI’s private
shareholders sold their stake to US company Cluff Mining and Toronto-listed Banro. In 1996,
Banro bought out Cluff and established the Société Aurifère et Industrielle du Kivu et du
Maniema (SAKIMA) as its Zaïrean subsidiary. SAKIMA was active in Maniema, North and
South Kivu Provinces.

In 2003 Banro sold SAKIMA’s tin and coltan mines to a South African company named Kivu
Resources, enabling Banro to concentrate on SAKIMA’s gold assets. Banro’s plan was to
carry out industrial mining, first at Twangiza near Bukavu in South Kivu Province, then at
Namoya in Maniema Province, and subsequently at Kamituga and Lugushwa in South Kivu.
In October 2011, Banro poured its first gold at Twangiza, which was the first Congolese

6 For example, author’s interview with Mulikuza Mudukwe Albert Bene Bugusho bwa Naluhwinja, the directeur
du cabinet of the South Kivu minister of mines, in Bukavu, June 2014.
7 Didier Gondola (2002), page 166.
8 Jason Stearns et al (2013), page 37.
9 Hereafter referred to as the Dodd-Frank Act. Section 1502 of the Act requires companies that are publicly
listed in the US and that manufacture goods containing gold, tin, tungsten or tantalum to disclose the origin
of these minerals, whether these minerals have financed conflict, and the due diligence steps they have
taken to establish this.
10 Gregory Mthembu-Salter (2009), page 3.

11
industrially mined gold for over fifty years. Banro had previously relocated over 1,000
artisanal diggers to make way for industrial production at Twangiza, only for other artisanal
miners to occupy and start working a part of the mine the company had intended to start
develop in late 2016.

Banro has greatly changed its attitudes to artisanal miners over the years. As late as 2010,
company officials still spoke of a full enforcement of Banro’s exploitation rights on its
concessions and the removal of artisanal miners, while four years later its management
exhibited a much more nuanced position. The company has indicated that it is still looking to
move artisanal miners out of concessions so that they can be developed industrially, but at
the same time has committed to help develop alternative livelihoods for diggers, and, jointly
with the DRC Government, to identify and partially prepare alternative ZEA’s to which
diggers could relocate.

At Namoya in Maniema Province, where Banro plans to begin gold production at the end of
2014, a scheme is underway to relocate artisanal diggers to Matete, a nearby site where
deposits that could potentially be artisanally mined have been identified. The scheme is
being implemented with the assistance of the International Organisation for Migration
(IOM) and the UN Mission to the DRC (MONUSCO). The company is also lobbying for a
pragmatic approach based on case by case exemptions from the law in respect of specific
deposits where Banro, groups of artisanal miners and the Government could find a common
interest to permit artisanal mining on industrial mining exploitation permits.11 At Mukungwe,
Banro has been an active participant in a slow process both to bring peace to the troubled
mine and to create the enabling conditions for the company’s eventual exploitation of the
asset (see Section Three).

A little way south of the South Kivu town of Fizi, near Lake Tanganyika, Leda Mining, a
subsidiary of formerly-Toronto and Australia-listed Anvil Mining (now delisted and a
subsidiary of China’s Minmetals), holds the title to six exploration permits, and has an option
agreement to develop them with Casa Mining, a British Virgin Islands-registered gold
exploration company. There are, however, several thousand artisanal diggers active on the
permits, where there is also a long, ongoing history of non-state armed group activity.
Despite this, Casa Mining is reported to be seeking to convert its exploration rights to mining
rights at the Cadastre Miniere (CAMI, the national mines registry) in Kinshasa. The South
Kivu government has said that it is working closely with Casa Mining, and claims the
company has agreed to cede half its permits to artisanal exploitation zones in the event of
its permits being converted.12

11 Author’s interview with Banro officials, Bukavu, June 2014.

12 Authors interviews with senior officials in the South Kivu ministry of mines, June 2014.

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Types of mining, production volumes and formalisation levels

With the important exception of industrial gold mining at Twangiza, mining in South Kivu is
entirely artisanal for all minerals. The scale of the province’s gold production is difficult to
estimate, since provincial statistics capture only purchases and exports from official gold
unités de traitement in South Kivu’s capital Bukavu. These statistics indicate that the unités
de traitement purchased 79.3 kg (2,797 oz) of gold during 2013, but 120.829 kg of gold
during only the first quarter of 2014 (4,262 oz), 49.3 kg (1,739 oz) in April 2014 and 51.7 kg
of gold (1,823 oz) in May 2014, and exported roughly the same amount during these
periods.13 The dramatic increase was ascribed by respondents to lower taxation rates for the
buyers, which has encouraged a greater proportion of the total output of the province’s
artisanal gold through official channels.

Figure 2. Official gold purchases from South Kivu 2013-14

140

120

100

80

60

40

20

0
2013 1Q 2014 Apr-14 May-14

Purchases of gold (kg)

The statistics, however, capture only a portion of the gold trade; the total volume and value
of gold production and trade in the province is unknown. Gold traders in Bukavu have
reported that most gold in South Kivu continues to pass through unofficial channels14, while
in 2011 the UN Group of Experts estimated that “the official chain is less than a percentage
point of hundreds of kilogrammes of gold trade that goes on in the province”.15 One pit
manager in Mukungwe, which is among the most productive gold mines in South Kivu, who
co-managed a shaft employing over 300 people, reported in 2014 that production from his
shaft (probably at 92-94% purity) had at times and before his water pumps broke down,
reached 56 kilos a week.16

13 Chef de Division Provinciale, Releve des Statistiques des Achats Effectues Par Les Entites de Traitement et
Comptoirs Agrees Installes A Bukavu, 2013-14, Division Provinciale des Mines, Province de Sud-Kivu.
14 Author’s interviews with gold traders, Bukavu, June 2014.
15 UN Group of Experts 2011, Box 5.
16 Interview with pit manager, Mukungwe, June 2014.

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Banro conducts industrial open pit mining at Twangiza. Banro has stated that at full mill
capacity, Twangiza can process 1.7m tonnes of ore per year, and produce “upwards of
10,000 ounces of gold each month with an expected mine life of seven to eight years”.17 Due
to technical difficulties however, Banro failed during 2012-13 to reach this target, though
output picked up in the first half of 2014. In 2013, Twangiza’s total gold output was 2.812
tonnes or 99,190 oz, giving an average monthly production figure of 8,265 oz. Output during
the first quarter of 2014 was recorded as 859.786 kg or 30,328.1 oz, giving a monthly
average of 10,109 oz.18

Formalisation levels for artisanal gold mining in South Kivu seem to be lower than in other
parts of the DRC. Nearly every pit team in the Musebe gold mine in Haut Katanga, for
example, uses a metal detector to improve its gold detection rate19, but the machines
appear absent from South Kivu artisanal gold mines. In addition, Musebe miners crush their
ores in mechanical crushers, while in most South Kivu mines, with the exception of in Misisi,
there is manual ore crushing only.

A few South Kivu artisanal gold mines use motor pumps to remove water from shafts, and
some also use motors to pump fresh air into them. In some of the province’s gold mines,
including Mukungwe, shafts have been created with the use of dynamite, but in the
majority, diggers have hewn out shafts by manually hammering at the rock.

In some South Kivu gold mines, as in other provinces, diggers are organised into so-called
‘co-operatives’, some of which have been recognised by the state authorities. The main
operating unit at most mines in South Kivu, however, appears to remains the pit team. There
is in addition a diggers’ representative at many mines, reportedly elected by the artisanal
miners, though this could not be verified.

The gold supply chain in South Kivu: from mine to export

Official statistics only track supply chains from South Kivu artisanal gold mines to export that
pass through official unités de traitement in Bukavu. At the time of research, the unités de
traitement in Bukavu were Alfa Gold, Cavichi, Namukaya, Comcam, Mining-Congo and
DTA.20 Of these, Alfa Gold, Cavichi and Namukaya were, according to the statistics, the most
active gold purchasers during 2013-14.

Additionally, a new minerals processing plant named CRM was opened in February 2014,
with the capacity to treat 300 tonnes of cassiterite and Colombo-tantalite a month, and 40
kilogrammes of gold. CRM has said it intends to begin exporting gold during the first quarter
of 2015, to be sourced from green validated sites in South Kivu and Maniema.

th
17 www.banro.com/s/Twangiza.asp?ReportID=307249, accessed June 27 , 2014.
18 Chef de Division Provinciale, Releve des Statistiques d’Expedition a Kinshasa Pour Analyse et Exportation de la
Production d’Or de Twangiza Mining, 2013-14, Division Provinciale des Mines, Province de Sud-Kivu.
19 Gregory Mthembu-Salter, Baseline Study One: Musebe Artisanal Mine, Katanga, Democratic Republic of
Congo, OECD, Paris, 2014, page 7. The report can be found at www.oecd.org/daf/inv/mne/Gold-Baseline-
Study-1.pdf.
20 Chef de Division Provinciale, Releve des Statistiques des Achats Effectues Par Les Entites De Traitement et
Comptoirs Agrees Installes A Bukavu Pour L’Annee 2013, Division Provinciale des Mines, Province de Sud-
Kivu, 2014.

14
Namukaya has been cited on numerous occasions in reports of UN Groups of Experts for
allegedly trading in gold from which non-state armed groups and the FARDC have derived
financial benefit.21 Namukaya representatives declined to be interviewed for this study.
Cavichi and Alfa Gold were more cooperative, though in both cases the senior buyers were
absent during the period of research, leaving behind junior employees to respond to
questions.

The interviews showed that the government’s reduction of taxes since 2012 on gold unités
de traitement has encouraged them into legal trade, although in practice the imposition of a
number of semi-legal or illegal taxes has significantly eroded their profit margins. Evidence
also emerged that some government officials continue turning a blind eye to gold smuggling
by well-connected business people, reportedly making it all the harder for unités de
traitement playing by the rules to compete.

In addition, legally registered unités de traitement in Bukavu face the major problem that
very few gold mines at the time of research had been validated, let alone validated as
‘green’, so rendering permissible to buy from. This has left the Bukavu unités de traitement
with non-validated gold being offered to them that they are not supposed to buy, but only a
tiny volume that they can legitimately purchase. Given the volumes of gold the unités de
traitement have reported purchasing, it seems highly likely that most of it has come from
mines not validated ‘green’.

Another challenge for the unités de traitement is that, at the time of research, International
Conference on the Great Lakes Region (ICGLR) certificates were not available from the
provincial ministry of mines, apparently due to the failure of the national ministry to supply
them. This was supposed to mean that the unités de traitement could not export, since
these certificates are legally required for exporting gold from the DRC.22 In practice,
however, unités de traitement have continued to export gold, using the following
documentation:

 evidence of taxes paid to state agencies;

 names of négociants who sold gold ore to the unité de traitement;
 amount of gold unités de traitement have purchased from the négociants;
 percentage of gold contained in the ore bought sold;
 extraction sites, or often just the territories, from which the négociants themselves
obtained the gold.23

21 E.g. Letter dated 18 October 2011 from the Group of Experts of the Democratic Republic of Congo addressed
to the Chair of the Security Council Committee established pursuant to resolution 1533 (2004), United
Nations, New York, 2011, paragraphs 179, 201.
22 Author’s interview with Thierry Sikumbili Boliki, chef d’Antenne de Bukavu CEEC, Bukavu, May 2014.
23 CEEC documentation, viewed by the author in Bukavu, June 2014.

15
 Banro’s gold supply chain
Banro’s gold output from Twangiza is not traded in South Kivu. Banro refines its Twangiza
gold onsite to 92% purity, and the resulting bullion is flown out to Rand Refinery in
Johannesburg (South Africa). According to Banro, the gold export process is triggered by a
provincial mines ministry representative at Twangiza, who signs a document making up
part of the pack of export documents. After this, officials from the Office Congolais de
Controle (OCC) and from the Centre d’Expertise d’Evaluation et de Certification des
substances minerals précieuses et semi- précieuses (CEEC) participate in an assay
procedure at the Twangiza mine, in which each bullion bar is drilled three times, and then
one sample analysed by the company and the other two by the OCC and CEEC. Once these
agencies’ assay reports are completed, the Direction Générale des Douanes et Accises
(DGDA) signs an export clearance, which is also signed by the mine’s clearing agent. After
this, each individual gold bullion bar is jointly sealed by DGDA and Banro representatives.
At this point, a private security company retained by Rand Refinery takes physical custody
of the bullion, and issues a receipt for this to Banro. The gold is then flown to Kinshasa,
and custody is transferred to the CEEC. Once Banro has paid its export taxes, and provided
proof of payment to the CEEC, the CEEC advises the national minister of mines to sign an
export certificate of origin. Once the CEEC receives the signed certificate from the
minister, it transfers custody of the gold back to the security company, which accompanies
the gold to Johannesburg. After this, the gold is cleared by the South African Revenue
Services (SARS), and then transferred to the Rand Refinery.1

Evidence from respondents during the fieldwork and a range of secondary sources, including
reports of the UN Group of Experts on the DRC, was consistent that much, and perhaps most
of the gold produced artisanally in South Kivu passes through the provincial capital Bukavu,
where some is purchased officially by unités de traitement but most is traded and exported
covertly and without record. The secondary sources reckon that gold passing through
Bukavu mostly heads to Dubai, sometimes via Bujumbura (Burundi), Kigali (Rwanda),
Kampala (Uganda) or Nairobi (Kenya). UN Group of Experts reports have also identified the
movement of gold from South Kivu directly to Bujumbura and to Tanzania.

16
III. Mukungwe case study

Mukungwe is situated in South Kivu’s Walungu territory, in the Mushinga groupement of the
Ngweshe collectivité.

Figure 3. Mukungwe mine, South Kivu

The mine lies within Banro’s industrial exploitation permit 43. Banro has expressed interest
in exploiting Mukungwe’s rich resources industrially but at the time of research had not yet
commenced a full evaluation of the orebody to confirm its viability for industrial mining due
to its focus on higher ranking exploration targets at other deposits and to reduced
exploration activities based on the current depressed gold price. In addition to its artisanal
mining population, which numbers up to 10,000, Mukungwe is also one of the most fought
over gold mines in South Kivu. The mine was validated in 2012 and certified ‘red’, because of
the presence of FARDC and FDLR.

As such, Mukungwe may seem an odd choice for a case study of a mine where the OECD
Due Diligence Guidance could be implemented. Yet Mukungwe has also been the focus over
the past two years of intense efforts by the national and provincial governments and the
Congolese NGO Observatoire Gouvernance et Paix (OGP) to address its problems and
mediate between the parties to the conflict. These efforts have achieved significant results,
though reconciliation between all the parties to its conflict has not yet been achieved. In
addition, an important disagreement that must still be resolved at Mukungwe is that while
Banro and the national and provincial governments want artisanal diggers to vacate the site
and relocate to an as yet unidentified ZEA, the diggers want to stay on the mine. Banro
states that vacation of the site by diggers would be done following prior consultation with all
stakeholders as per the company’s practice.

17
Type of mining, production volume and formalisation levels

There are no precise statistics for the number Figure 4. Rock crushers at Mukungwe,
of artisanal diggers in Mukungwe; a validation including a child (in yellow trousers)
mission that visited the site in 2012 estimated
that there were between 1000 and 4000 active
diggers. Diggers’ representatives interviewed
for this study in 2014 estimated there to be
approximately 5000 artisanal miners. The
representatives added that there were 205
pits at Mukungwe, of which they estimated
100 were then functional.

In addition to the diggers, at least as many

people again work in Mukungwe as rock crushers and sorters, and traders of a wide range of
goods from fresh produce to manufactured goods, or are employed in services including
restaurants, bars, nightclubs and brothels. There is in addition a large but thus far entirely
uncounted population of children, including many who are under 15 and work either as
miners or as rock crushers (see picture).
Figure 5. Miners' houses, perched
As in so many artisanal mines, living precariously on a hillside
conditions are extremely difficult, sanitation
is an enormous challenge and basic services
including schools and clinics are entirely
absent, with the nearest a long walk away.

Mukungwe’s gold production is unrecorded.

The estimate of a joint validation mission of
2012 was 22.5 kilos/month, by far the highest
amount of any South Kivu gold mine assessed
thus far by the mission. Yet even this
estimate might be too low, since the manager of one of Mukungwe’s largest pits reported
that production at his pit alone had at times reached 56 kilos/week.

Figure 4. One of the most productive Mukungwe’s diggers pan the river that flows
pits in Mukungwe through the mine and have also bored shafts into
the hills on either side of it. One pit manager
reported that his shaft, apparently one of the
longest, travelled over 100 metres horizontally and
then dropped vertically another 100 metres (see
photo). Dynamite was used in the construction of
the shaft, but most of the work was done manually
with picks and shovels. The pit manager said that he
was one of four managers who were in charge of a
total workforce of over 300 diggers. The shaft, like
many in Mukungwe, requires motorised pumps to evacuate water, but the manager

18
reported that the shaft pumps no longer worked. As a result, production had slumped from
an alleged peak of 56 kilos per week to a “very small” amount. The manager said that he and
his colleagues are reluctant to invest in new equipment for as long as the artisanal miners’
long term presence on the mine remained uncertain.24

The water pumps appeared to be the only Figure 7. Washing gold ore in
mechanised feature of production at Mukungwe. Mukungwe
Rock crushing was performed by hand, and there
were no mechanical crushers evident on site. All
panning, washing and sieving was also performed
manually.

Three government agencies were present in

Mukungwe during the fieldwork: the territorial
division of the Police Nationale Congolaise (PNC),
the specialised mining police division of the PNC,
and the Agence Nationale des Renseignements
(ANR). Sources close to the family of the chief of the Mushinga groupement alleged that the
ANR worked closely with one of the rival land-title holders at Mukungwe and defended its
interests (see Annex A). 25 Unlike in many artisanal mines, there were no agents of
SAESSCAM, the Division des Mines or the Direction Générale de Migration (DGM) in
Mukungwe. The departure of SAESSCAM and the Division des Mines was on the orders of
the national ministry of mines, once it was officially confirmed that the mine was on Banro’s
permit 43 (see below). Uniformed soldiers of the FARDC had been present at Mukungwe
until they were withdrawn on the orders of Commander Masunzu of the 10th military region
during 2013 (see Conflict links and other Annex II risks, below).

Respondents at Mukungwe during the fieldwork indicated that there were at least 100
négociants purchasing gold from the mine. The négociants, who have not formed an
association, declined to be interviewed for this study. Other respondents, including diggers’
representatives and government officials, all said that they believed that the main unité de
traitement purchasing the mine’s output was the Bukavu-based Namukaya. However, none
of Namukaya’s official declarations to the South Kivu ministry of mines during 2013-14
indicated purchases from Mukungwe.

24 Author’s interview with pit co-manager, Mukungwe, June 2014.

25 Author’s interview with ‘exiled’ pit managers from Mukungwe, Bukavu, 2014.

19
History of the mine

Gold is said to have been discovered in Mukungwe in 1978. SOMINKI never operated the
deposit but thousands of artisanal miners flocked to the mine from the late 1970s onwards.
Production was said to be high, and diggers were obliged to pay taxes to the chief of the
groupement, Pasteur Kurengamuzimu. Two families, the Rubangos and the Chunus, were
deemed land title holders at Mukungwe and the Rubangos were running the mine in 1996
when Laurent Kabila’s Alliance des Forces Démocratiques pour la Libération du Congo (AFDL)
swept through South Kivu, with the FAZ fleeing before them. The AFDL came through
Mukungwe but did not linger or become involved in mining activities, though there were
sporadic, armed tax collection exercises at Mukungwe during the same period by the FDLR.

The 1998-2002 war had a much greater impact on mining at Mukungwe. The
Rassemblement Congolais pour la Démocratie (RCD) and its Rwandan backers took a keen
interest in artisanal mines, including Mukungwe, where the Rubangos have admitted paying
a percentage of their takings to RCD military commanders in return for being allowed to
retain day-to-day control of the mine. The Rubangos report that they were later obliged to
permit RCD military commanders to take direct ‘ownership’ of specific pits in Mukungwe.26
From that period until 2013 there was a near continuous presence of uniformed, armed
troops at Mukungwe, who in addition to supervising their commanders’ pits, also operated
illegal detention centres. The Rubangos have furthermore confirmed that there were also
often FDLR combatants present in and around the mine, and combatants of another militia,
Mudundu 40.

Banro began operations in South Kivu in 2003, after the civil war was largely over. Banro
discovered early on that Mukungwe lay within its permit, but could not establish a presence
there for as long as the mine remained both militarised and populated with thousands of
artisanal miners refusing to leave. In addition, at that time, the site was not yet a high
ranking target for the company. Adding to Banro’s difficulties, the Rubangos and Chunus
both vehemently denied that Mukungwe lay within the company’s permit, and insisted on
their rights to its production.

An increasingly bitter feud had developed between the Rubangos and the Chunus, which has
continued until the present time (See Annex A for more detail), and to enforce their rival
claims, the two families enlisted competing FARDC commanders who supplied firepower in
return for payments and pit ‘ownership’. The results on the ground were often bloody, with
periods of calm interspersed with episodes of intense violence and destruction, as FARDC
soldiers under the command of the families’ military backers rampaged against diggers
identified with the opposite camp.

For several years, Chunus’ main backer was the infamous General Bosco Ntaganda, who in
mid-2014 awaited trial at the International Criminal Court in The Hague for war crimes and
crimes against humanity. On the Rubangos’ side, according to the UN Group of Experts in
2011, were a selection of FARDC commanders who included Lieutenant Captain John

26 Author’s interview with members of the Rubango family, op cit.

20
Cinyabuguma, Major Kitenge and Major Bahati.27 In March 2012, a validation mission visited
Mukungwe and classified the mine ‘red’, citing the presence of the FARDC and FDLR.

Beginning in July 2012, the OGP organised a series of workshops to kick-start the process of
reconciling the Rubangos, Chunus, Kurhengamuzimus, the diggers and Banro. The meetings
re-established communication between all the contending parties, but disagreement
persisted about whether or not Mukungwe lay within Banro’s permit. All parties, however,
accepted that a definitive ruling was required from the state on this vital issue. A definitive
ruling was thus issued by the national Minister of Mines which verified that the deposit falls
within Banro's permit 43, and stipulated that the area be stabilised through the launching of
the multi-stakeholder consultative "road map" process facilitated by OGP and the provincial
Government. It was also agreed that all the informal detention centres operated by armed
troops on the mine should be closed down.28

An ambitious roadmap was developed during the workshops, to be followed for six months,
which, inter alia, called for:

 The installation of ‘non-partisan’ police at Mukungwe;

 The denunciation by all stakeholders of any military presence;
 The development of detailed alternative employment plans for artisanal miners;
 The return of the Chunu family to Mukungwe;
 The establishment of a permanent platform for discussions between Mukungwe
stakeholders;
 Compensation for the Chunus and Rubangos by Banro. The exact nature of this
compensation will be discussed based on consultations around alternative livelihood
options and repositioning in other livelihoods or in legitimate artisanal mining
ventures;
 Identification of all artisanal diggers at Mukungwe;
 Banro to leave diggers in place at Mukungwe while it continued with its exploration
work there.

Since then, Banro has indicated that it will explore for gold around Mukungwe for three
years, during which it hopes to identify other gold deposits that would be sufficiently
attractive to establish a ZEA to entice the diggers away from Mukungwe.Banro has indicited
it may offer access to selected deposits on its permits for artisanal mining cooperatives,
provided the DRC Government authorises and facilitates this.

27 Letter dated 18 October 2011 from the Group of Experts of the Democratic Republic of Congo, op cit.
Paragraphs 529 and 530.
28 Observatoire Gouvernance et Paix, Rapport de L’Atelier d’Harmonisation des Points de Vue Des Parties En
Conflits, Pour Une Paix Durable à Mukungwe, OGP, Bukuvu, 2012.

21
IV. Conflict links and other Annex II risks
Direct or indirect support to the FARDC and non-state armed groups

Many gold mines in South Kivu Province have historically provided, and in numerous cases
continue to provide significant levels of finance to the armed forces, and to non-state armed
groups, including Mai Mai Yakutumba, Raia Mutomboki, Mudundu 40 and FDLR. An online
map created by Belgian research outfit IPIS provides a regularly updated guide to which
mines endure a presence of armed groups and/or the FARDC.

Figure 5. IPIS map indicating presence of FARDC and armed group

The FARDC and non-state armed groups have principally profited from artisanal gold mining
by taxing diggers, traders and transporters. FARDC commanders have also made money by
‘owning’ specific pits in mines. Non-state armed groups and the FARDC have in addition
generated income by selling goods and services to artisanal mining communities, and more
generally by imposing taxes on local economies in which artisanal gold mining plays a role.

In its 2011 report, the UN Group of Experts reported that Mai Mai militia in Misisi, which is
just inside the borders of neighbouring Maniema Province, were taxing gold diggers from
the Kingizi, Kaboga and Katchoka mines and that military involvement in other Misisi mines
“had never been more blatant”.29 The Group also reported on profiteering by Colonel Rugo

29 Letter dated 18 October 2011 from the Group of Experts of the Democratic Republic of Congo addressed to
the Chair of the Security Council Committee established pursuant to resolution 1533 (2004), United Nations,
New York, 2011, paragraph 508.

22
Heshima at the Kamituga gold mines30 and by “FARDC elements loyal to 10th military region
commander General (Patrick) Masunzu” in Lugushwa.31 The Group’s 2012 and 2013 reports
both stated that Colonel Heshima was taxing gold production in Misisi.32

The UN Group’s 2013 report further indicated that Raia Mutomboki “controlled most of the
gold mines in Shabunda territory”33 and that during March and April of 2013, “Yakutumba
had collected taxes for his “war effort” in the Misisi area”.34 During 2014, heavy fighting was
reported between the FARDC and Raia Mutomboki in the Shabunda area, and between the
FARDC and Yakutumba in Misisi, but the impacts on gold mining in these territories is not yet
clear.

In view of recent debate about the value of international efforts to mitigate the risk of
conflict financing from mineral supply chains, it is worth stressing that the argument is not
being made here is not that these armed groups or FARDC elements have solely been
motivated by a desire for gold, and nor is it claimed that the armed groups and FARDC would
find themselves unable to profit from local economies if there was improved OECD due
diligence implementation on the gold sector. The premise behind this report and research is
simply that those trading and consuming gold should want to, and be obliged to take
reasonable steps to ensure that their activities do not provide direct or indirect support to
non-state armed groups or the FARDC.

Mukungwe

The joint validation mission rated Mukungwe as ‘red’ in 2012 for good reason; FARDC
commanders had been taxing the mine for years and some had ‘owned’ pits too. There is
also evidence that the FDLR and Mudundu 40 have extracted rents from Mukungwe, and
less certain allegations that M23 has done so too.

The logic of the OECD’s Due Diligence Guidance, however, is forward looking, and the key
questions are whether the links between the mine and conflict financing are weakening, and
whether and how in the future they could be weakened further. In this regard, the 2013
departure of uniformed troops from Mukungwe, after a fifteen-year presence, was clearly
an important positive step. Also hugely positive is the reconciliation process still being
directed by OGP, which holds out the prospect of further demilitarising Mukungwe, by
lessening the motivation of stakeholders to use force to defend their claims. In addition, the

30 Letter dated 18 October 2011 from the Group of Experts of the Democratic Republic of Congo (op cit),
paragraphs 522-3
31 Letter dated 18 October 2011 from the Group of Experts of the Democratic Republic of Congo (op cit),
paragraph 533.
32 Letter dated 12 November 2012 from the Chair of the Security Council Committee established pursuant to
resoliution 1533 (2004) concerning the Democratic Republic of Congo addressed to the President of the
Security Council, United Nations, New York, 2012, paragraph 185; and Letter dated 12 December 2013 from
the Group of Experts on the Democratic Republic of Congo addressed to the Chair of the Security Council
Committee established pursuant to resolution 1433 (2004) concerning the Democratic Republic of Congo,
United Nations, New York, 2013, paragraph 162.
33 Letter dated 12 December 2013 from the Group of Experts on the Democratic Republic of Congo (op cit),
paragraph 168.
34 Letter dated 12 December 2013 from the Group of Experts on the Democratic Republic of Congo (op cit),
paragraph 169.

23
FDLR’s presence around Mukungwe has greatly reduced and at the time of writing there
were no recent reports of the presence of other militia, such as the Mudundu 40.

On the other hand, many well-informed respondents have alleged that military
commanders, including Masunzu himself, have retained covert financial stakes in
Mukungwe, and that senior provincial politicians have done so too. In addition, some FARDC
soldiers are reported by well-placed respondents to have stayed on in Mukungwe but to
have changed into civilian clothes, and respondents have also reported a residual presence
of militia combatants. The soldiers are apparently in Mukungwe to protect the pits of their
commanders, while the militia combatants are diggers, working for their own day-to-day
sustenance.35

Serious abuses associated with extraction, transport, and trade of minerals

The UN Group of Experts, international and Congolese researchers, and NGOs have all found
evidence of multiple instances of serious abuses associated with the extraction, transport
and trade of gold in South Kivu. The abuses include torture, armed extortion and theft, rape,
arbitrary detention and murder. The main perpetrators of these abuses have been non-state
armed groups and the FARDC, but there is also evidence of abuse by the mining police,
Division des Mines, Service d’Assistance et Encadrement du Small Scale Mining (SAESSCAM)
and the Agence Nationale des Renseignements (ANR).

Mukungwe

FARDC soldiers for years ran illegal detention centres in Mukungwe, where it has been
alleged by respondents36 that they meted out cruel, inhuman and degrading treatment,
including torture. There are in addition multiple testimonies and secondary literature
documenting instances of the military’s violence and intimidation. Artisanal diggers at
Mukungwe reported in mid-2014, however, that incidents of torture and other cruel and
degrading treatment had declined significantly since the departure in 2013 of armed FARDC
troops.

Forced and compulsory labour was reportedly common during the period when armed
groups occupied Mukungwe. Diggers have reported that incidents of forced labour had
greatly declined since their departure.

The worst forms of child labour remain prevalent in Mukungwe. During the fieldwork,
children were much in evidence and were witnessed to be involved in several stages of
mining, from tunnelling to crushing and washing ores.

Solidarite des Femmes pour le Developpement Integral (SOFEDI), a Bukavu-based NGO, is

working with women in Mukungwe, with a particular focus on sex-workers and HIV/Aids.
SOFEDI has reported that rape and other forms of sexual violence were “a reality” in

35 Author’s interviews, Bukavu and Mukungwe, June 2014.

36 Author’s interviews in Mukungwe and Bukavu, June 2014.

24
Mukungwe.37 Women respondents at the mine site said rape was very common, with one
describing sexual violence as “common currency” among artisanal miners there.38

The FARDC and non-state armed groups have repeatedly committed serious crimes in
Mukungwe and it is possible that some of these might be classified as war crimes, other
serious violations of international humanitarian law, crimes against humanity, or genocide.
General Bosco Ntaganda, who for a time backed the Chunus at Mukungwe, has been
charged with war crimes and crimes against humanity at the International Criminal Court in
The Hague. There have, however, been no reported instances of these crimes at Mukungwe
since the departure of the FARDC in 2013.

Bribery and fraudulent misrepresentation of the origins of minerals

There continue to be multiple allegations of bribery and the fraudulent misrepresentation of

the origins of artisanally mined gold in South Kivu. Regarding the former, a senior provincial
official provided a telling example from 2013 in which he had personally confiscated a
consignment of gold on suspicion that it had provided conflict financing. The official claimed
that the gold disappeared from his office while he was away at a conference, apparently
because an unregistered gold trader had bribed a colleague to release it. The official
reported the incident to his superiors, but there was no follow-up, leading him to suspect
that his superiors were also involved.39

Traders do not, of course, misrepresent the origin of gold they smuggle out of South Kivu,
since such exports are unrecorded. Fraudulent misrepresentation is an important issue,
however, for gold purchased and exported by official unités de traitement. Provincial
statistics, for example, indicate no purchases of gold from Mukungwe during 2012-14,
despite the fact that it is said to be the most productive gold mine in the province. Yet
numerous respondents interviewed for this study alleged that Mukungwe’s gold was mostly
sold to the Namukaya unité de traitement. Namukaya declined to comment.

For as long as the supply of gold from mine sites validated as ‘green’ continues to be
minimal, fraudulent misrepresentation will continue, particularly if unités de traitement are
not required to furnish any proof beyond the declarations of the négociants they have
bought from of the origins of the gold they purchase.

37 Author’s interview with Viviane Sebahire Maramuke, Co-ordinator, SOFEDI, Bukavu, June 2014.
38 Author’s interview with women living in Mukungwe, June 2014.
39 Author’s interview with senior South Kivu government official, Bukavu, June 2014.

25
Mukungwe

At Mukungwe, artisanal diggers have for many years been required to pay 50% of the
estimated value of their output to representatives of the Rubango family. The Rubangos
have claimed that this percentage is “traditional”, adding that for years the family was
forced to pay half of its income from the mine to military commanders. Several respondents
reported that the Rubangos were also obliged to make significant payments to their political
backers, allegedly including senior members of the South Kivu provincial government.40

The available evidence suggests that gold production at Mukungwe is at least 22

kilos/month, and maybe much higher. Respondents have indicated that most of
Mukungwe’s gold is traded in Bukavu, where it is either unrecorded or misrecorded as the
output of somewhere else. The regular, unhindered and unrecorded export from Bukavu of
the volumes of gold that Mukungwe produces indicates a strong likelihood that state
officials are being bribed either to turn a blind eye or actively to facilitate the process.

Money laundering, payment of taxes, fees and royalties

Legally exported gold from South Kivu incurs a range of taxes, payable to several
government agencies. Payment is due to the OCC, CEEC, DGDA, the Direction Générale des
Recettes Administratives (DGRAD), SAESSCAM and the province’s Cellule Technique de
Coordination et de Planification Minière (CTCPM).

In 2012, the government reduced gold export taxes and the fees payable by registered
unités de traitement, which appears to be the main reason that legal exports of artisanally
mined gold have since risen. Yet the combination of official taxes and the many other semi-
legal or illegal levies imposed on official unités de traitement by state officials and armed
groups has continued to make smuggling gold from South Kivu a more profitable activity,
even when taking into account the bribes to officials that traders often need to make to
protect their gold smuggling businesses.

No evidence was collected during the research regarding money laundering. Allegations,
however, abound that one reason some buyers of South Kivu artisanal gold can offer such
high prices to sellers is that they are laundering funds, and are consequently more
concerned to convert their money into gold then to obtain it for the lowest possible price.

Mukungwe

No official taxes, fees or royalties are paid on gold production at Mukungwe, apart from the
percentage discussed above that diggers must pay to the Rubangos. Nor are official taxes
paid on the smuggled export of Mukungwe’s gold. However, official taxes are likely being
paid on gold from Mukungwe that has been fraudulently recorded as coming from
elsewhere, and is exported officially from Bukavu.

40 Author’s interview with ‘exiled’ Mukungwe pit managers, Bukavu, June 2014.

26
V. Awareness and levels of implementation of the OECD Due Diligence
Guidance

Awareness of the OECD Due Diligence Guidance has grown substantially within the South
Kivu ministry of mines, SAESSCAM and CEEC, and so too have their implementation efforts .
Additionally, due to an OGP training initiative there is also some awareness of the OECD Due
Diligence Guidance within the 10th military region of the FARDC (see above). However, the
persistence, albeit covertly, of the private financial interests of many of the province’s state
officials, politicians and military commanders in South Kivu’s artisanal gold mines remains a
formidable obstacle to further implementation of the Guidance in the gold sector.

In marked contrast to South Kivu unités de traitement trading in tin, tungsten and tantalum
(3Ts), most of which have received training in the OECD Guidance, awareness of the
Guidance is low-to-absent among Bukavu’s gold unités de traitement, though some
respondents working for them reported having heard “something about it” in workshops.
The Namukaya unité de traitement has repeatedly been made aware of the Guidance
through its engagement with successive UN Group of Experts, and because of their reports,
which have repeatedly castigated the company for its alleged failure to implement due
diligence. There is little evidence, however, that this has resulted in significant changes in
Namukaya’s behaviour, except perhaps for the increased reluctance of its staff to engage
with researchers on the topic.

Banro staff exhibit a thorough knowledge of the OECD Guidance, and through its chain of
custody arrangements (described above) and reporting procedures the company strives to
ensure that it implements the Guidance. Banro has pointed out, however, that the
requirements of the US Dodd Frank Act do not apply to its output, since its industrial
production is not sold on to manufacturers but to a refiner which has to comply with
stipulations regarding the sourcing of what it purchases.

Initiatives to mitigate Annex II risks

South Kivu Province

There are initiatives underway by a variety of stakeholders that intended to mitigate Annex
II risks in South Kivu’s artisanal gold sector, and to implement the Appendix of the Due
Diligence Guidance that outlines suggested measures to create economic and development
opportunities for artisanal and small-scale miners. The initiatives are principally:

The joint Mine Site Validation programme in South Kivu and other Congolese provinces, in
which multi-stakeholder groups consisting of government officials, ICGLR and MONUSCO
representatives, representatives from international development agencies, Congolese civil
society, and industry members visit and assess artisanal mining sites, and then report on
whether the mines are ‘red’, ‘orange’ or ‘green’. ‘Red’ means the security and social
situation at the mine is problematic because of the presence of armed groups,
‘uncontrolled’ security forces, or pregnant women or children under the age of 15 mining.
‘Orange’ means the security and social situation is ‘partially satisfactory’ but could improve if

27
reforms were implemented. ‘Green’ means the social and security situation is ‘entirely
satisfactory’, implying that the site is under the control of the mines ministry and there is no
presence of armed groups, nor ‘uncontrolled’ members of the security forces, and no
pregnant women or children under the age of 15 are mining.41 As of June 2014, ten South
Kivu gold mines had been validated, of which four mines, including Mukungwe, were rated
as ‘red’, three as ‘orange’ and three as ‘green’.42

A second, related initiative is the ICGLR Regional Certification Mechanism (RCM). Under the
RCM, output from mines that are classified ‘green’ by the joint mine site validation teams
will be entitled to receive ICGLR certificates from the provincial Division des Mines, thereby
permitting export from the DRC. Once the scheme is fully rolled out, it has the potential to
regularise and simplify buyers’ due diligence implementation, since – in theory at least – all
mining output with ICGLR certificates will be ‘conflict free’. As indicated earlier, however,
until the scheme is fully rolled out there is the risk that it will create a new bottleneck,
because too little mining production will be certified. An additional concern is of certificates
being issued before the evaluation and auditing components are operational, which risks
compromising the credibility of the certification process.

A third initiative is the South Kivu Province Comité Provincial de Suivi (CPS), chaired monthly
by the South Kivu minister of mines, Adalbert Murhi Mubalama during the time of research
and writing. The CPS brings together government officials, representatives of the FARDC and
police, mining companies, mining cooperatives, and civil society to discuss and if necessary
resolve issues in the provincial mining sector. The deliberations of the CPS are supposed to
be informed by input from Comités Locales de Suivi (CLS), though few of these had been
established in the province at the time of writing.

An interesting initiative was launched in 2013 to train the FARDC’s 10th military region
(which covers South Kivu) in minerals traceability and due diligence, directed by the Bukavu-
based OGP. Largely because of this initiative, 10th military region commander Patrick
Masunzu agreed in mid-2013 to vacate his troops from the Mukungwe mine. This is an
important step forward, though the initiative needs to be sustained to be effective, and
particularly if it is to address the vital, but thorny issue of continued covert military financial
interests in mines, including Mukungwe.

The official policy of the national and provincial government is for the artisanal miners to
vacate permits held by mining companies and to relocate to Zones d’Exploitation Artisanal
(ZEA). The authorities have appealed to the companies to help identify these ZEA. Banro
says it wants the ZEA on permits whose users have not made use of their rights43, while the
government’s preference is for the ZEA to be located on ‘unused’ parts of the industrial
miners’ permits.44 This is despite the fact that Congolese law does not allow artisanal mining

41 Ministere des Mines, Arrete Ministeriel No. 0058/Cab.Min/Mines/01/2012 Du 29 Feb 2012, Fixant les
Procedures de Qualification et de Validation des Sites Miniers Des Filieres Aurifere et Stannifere dans les
Provinces du Katanga, du Maniema, Du Nord Kivu, du Sud Kivu et de la Province Orientale, Ministry of Mines,
Kinshasa, 2012.
42 Joint validation team documentation, seen by the author in June 2014.
43 Author’s interview with Banro representatives, Bukavu, June 2014.
44 Author’s interview with South Kivu minister of mines Adalbert Murhi Mubalama, June 2014.

28
on industrial mining exploitation permits. Banro is currently lobbying to propose a more
pragmatic approach is adopted to this issue.

In Maniema Province, B anro has identified a possible ZEA called Matete which lies on state
land some 25 km from Banro's Namoya permit. The state declared the Matete deposit as a
ZEA following a request by Banro to do so in order to create a relocation opportunity for
artisanal miners operating on the Namoya permit.

According to the company, progress has been made towards the design and validation of a
traceability regime under which the artisanal mining cooperative made up of former diggers
on Banro's permit can mine and export gold. The OIM - MONUSCO teams are involved in
setting up a capacity-building intervention to support the artisanal mining Cooperative
COMICA, and provide local SAESSCAM officials with the skills to operate in a business-
oriented manner. The company has said it expects artisanal gold production to begin there
before the end of 2014. 45 Additionally, Casa Mining has agreed to facilitate the
establishment of a ZEA on its permits in Fizi, once it has managed to convert these permits
from exploration to industrial mining permits.46

Initiatives at Mukungwe

This report has already detailed a number of important initiatives to mitigate Annex II risks
and promote the Appendix of the Due Diligence Guidance at Mukungwe. The initiatives
include Mukungwe being classified as ‘red’ by a joint validation team; the official ruling that
the mine lies within Banro’s permit 43 (which has since been accepted by all stakeholders);
the mediation process organised by OGP including efforts to remove armed FARDC soldiers
from Mukungwe; SOFERDI’s work with women in Mukungwe; and Banro’s public decision to
permit artisanal miners to remain at Mukungwe, at least until it completes exploration work
there, and to look for an alternative ZEA for the diggers to move to.

One option that has been little explored thus far is the SOMINKI model, in which the
company holding the mining permit leaves the diggers where they are and buys their
output. Banro staff have said that it would be premature to comment on this option until
geological exploration is complete, and Mukungwe is validated ‘green’, but have highlighted
a number of risks this option would pose to the company. The prime concern for the
company would be the risk of Banro's clean industrial production stream being
contaminated by gold production from other sources as gold traceability for artisanal mining
production is in it's infancy. In addition, other risks are that Banro could be obliged to take
responsibility for the myriad of health and safety issues at Mukungwe, and the company’s
being held responsible in the event of continued conflict financing.

The Chunus, Rubangos and other diggers’ representatives, by contrast, all said the best
option for them would be for the diggers to stay put and for Banro to purchase their output.
Asked whether they would accept that purchasing would have to be conditional on

45 Author’s interview with Banro representatives, op cit.

46 Author’s interview with Mulikuza Mudukwe Albert Bene Bugusho bwa Naluhwinja, directeur du cabinet of
the South Kivu minister of mines, Bukavu, June 2014. This was confirmed by Casa in a public statement in
October 2014.

29
Mukungwe being validated green, and on demonstrable implementation of the OECD Due
Diligence Guidance, verified by an independent third party, all replied that they would
accept. Some also appealed for Banro’s help in the due diligence implementation at
Mukungwe and in securing a ‘green’ validation, and also appealed for Banro’s assistance in
gold production, including the provision of mechanical drills, crushers and pumps. Asked
whether if Banro agreed to purchase gold from Mukungwe on condition that the mine was
re-validated green, and there was evidence of implementation of the OECD Guidance, that
would create new incentives to demilitarise and de-criminalise Mukungwe, the Chunus,
Rubangos and other diggers’ representatives all said that it would. They also said that if
Banro gave this commitment, this would help to defuse the conflict between themselves.

30
VI. Conclusion and recommendations: Industrial and artisanal gold
mining in eastern DRC – conflict, co-habitation or cooperation?

As of mid-2014, industrial gold mining in South Kivu was only three years old. Its arrival in
the province has brought fresh tax revenues to the administration, some much-needed new
infrastructure, and an injection of liquidity into the struggling domestic economy. But
industrial gold mining has also increased anxiety among the province’s large populations of
artisanal miners, who have for years worked gold concessions on the industrial miners’
permits, and fear they will be evicted to make way for the permit holders. Diggers in
Mukungwe have reported the experiences of former artisanal miners from Twangiza greatly
worried them, claiming that most were much poorer than before, despite Banro’s efforts to
create alternative employment.47

The compromise advocated by the national and provincial authorities is the establishment of
new ZEAs to which artisanal diggers can relocate. One such ZEA, at Matete in Namoya, south
west of Bukavu, is due to begin operations by the end of 2014. If Matete works well, this
could create momentum to extend the model elsewhere. Yet the experience of copper and
cobalt ZEAs in Katanga province is instructive. ZEAs were, for example, created near Kolwezi
in the early 2000s for artisanal diggers displaced from newly privatised industrial copper and
cobalt mines. But the Katangan ZEAs proved harder and less lucrative to mine then the
industrial sites they had recently vacated, and diggers frequently left once geological
conditions became too challenging, with many re-invading their former places of work. The
same could happen in South Kivu.

And for as long as established gold trading networks remain untransformed, so too will the
risk that artisanal output from the industrial miners’ permits will continue to fund conflict.
To mitigate this risk, at least in artisanally mined sites situated on the permits of industrial
miners, such as Mukungwe, one option that has been little explored is the “SOMINKI
option”, where the artisanals stay put and the permit holders buy their output, subject to
clear evidence that due diligence in line with the OECD Due Diligence Guidance was being
implemented.

Under the SOMINKI option, the new buyers would have to suspend or cease buying
artisanally produced gold on their permits if their due diligence showed them that the risk of
conflict financing had re-emerged. The risk here would be that a purchase suspension could
itself trigger a return to conflict financing, as the old gold buying networks moved back in to
fill the purchasing vacuum. This risk would need to be mitigated by thorough, multi-
stakeholder discussion and agreement about the process by which decisions to suspend
purchasing were taken, implemented and then reviewed.

A further risk to the SOMINKI option would be deliberate derailment by those financially
disadvantaged by it, including military commanders and politicians who stood to lose
lucrative sources of income. Mitigating this risk would require determined political will from

47 Author’s interviews with artisanal diggers and their representatives, Mukungwe and Bukavu, June 2014.

31
the provincial and national authorities, assisted by careful on-the-ground evidence gathering
and analysis by credible third parties. Well-designed donor agency and civil society and
industry support for the SOMINKI option could also play an important role in this risk
mitigation.

Recommendations

The national and South Kivu provincial governments should continue their efforts, along
with Congolese civil society, to broker “win-win” resolutions of conflicts between mining
permit holders and artisanal gold miners, and should be assisted in doing so by international
donors and agencies.

The Congolese authorities are keen for ZEAs to be an important part of the solution, but
should be mindful of the challenges presented by ZEAs and not imagine that they are a
panacea to conflicts of interest between artisanal and industrial mining companies.

The Congolese authorities and other stakeholders should, where appropriate, consider the
“SOMINKI option”, where artisanal miners remain active on permit holders’ concessions and
sell their output to them, subject to the validation of the mines as ‘green’, and demonstrable
efforts by key stakeholders to implement the OECD Due Diligence Guidance.

The DRC authorities’ capacity to broker the resolution of conflicts between mining permit
holders and artisanals is compromised by the covert financial interests of politicians and
military commanders in mines, and continued illegal rent seeking by a wide range of officials
in the sector. Necessary, though not sufficient, to tackle this is strong political will from
senior levels of the provincial and national administration.

The international community should support projects that tackle conflict issues in artisanal
gold mines, and projects that seek to demilitarise them, such as the work by OGP on
Mukungwe, which has already yielded the FARDC’s official withdrawal from Mukungwe
(though the covert financial interests of senior FARDC commanders appear to have
remained intact).

The international community should also support and assist the roll-out of the ICGLR
certification system in South Kivu and elsewhere in the region, not least by funding an
accelerated and increased programme of mine site validations. More mine site validations
would increase the number of validated sources of supply for unités de traitement,
mitigating, at least to a degree, the risk of illegal gold purchasing and export.

The OECD should perform dedicated Due Diligence Guidance training for South Kivu gold
unités de traitement.

32
Annex: Recent conflict and conflict resolution at Mukungwe
Family feuding began at Mukungwe soon after the discovery of gold there in 1978.
According to one of the Mukungwe land-title holders, the Rubango family, they and the
Chunus – the other land-title holders - became increasingly unhappy at the alleged
unwillingness of the groupement chief, Pasteur Kurhengamuzimu to share gold mining
proceeds with them. In the first of many legal actions, the Rubangos said that they and the
Chunus brought a joint legal suit against Kurhengamuzimu, and allegedly received a
favourable judgement against him in 1983.48

Around 1993, Kurhengamuzimu had Ntabala Chunu, a senior member of the Chunu family,
evicted from the Mushinga groupement. According to Chunu, he has never since returned to
Mukungwe. Chunu said that after his eviction, he requested the Rubangos to manage his
interests there, and the Rubangos maintain that they duly did so. Chunu, however, has
alleged that the Rubangos have been endeavouring to push him out of Mukungwe.

The Rubangos in 2008 and the Chunus in 2009 both succeeded in obtaining official
documentation that cited them as the land title-holders at Mukungwe, and both claimed
that their land titles entitled them to operate the mine. 49 The DRC’s mining code stipulates,
however, that only mining permit holders are legally allowed to operate mines.

In April 2013, Pasteur Kurhengamuzimu was murdered and was succeeded as chief of the
Mushinga groupement by his son, Tito Obwirh’oyunva Kurhengamuzimu. The
Kurhengamuzimu family later publicly accused the Rubango family of being behind the
killing. The family has denied this. In the same month, Chunu secured a court order against
Alexis Rubango, forbidding him from travelling to Mukungwe, which remained in force
during the fieldwork. Rubango had not visited the mine since the court order was issued, but
has remained in close contact with his supporters at Mukungwe, who have retained de facto
control on site.50

Following a decision by a multi-stakeholder workshop organised by OGP that the issue of

whether Mukungwe lay within Banro’s permit should be settled once and for all (see
Mukungwe case study: History of the mine), a team from the national ministry of mines
travelled to South Kivu in May 2013 to examine the issue. The team held meetings in
Bukavu, including with Banro, Chunu and Rubango, but decided against visiting Mukungwe,
in light of M23 and Mudundu 40 militia activity.

Chunu had once been backed by the infamous warlord General Bosco Ntaganda, and the
government team’s report stated its belief that Chunu was this time in league with M23.

48 Author’s interviews with members of the Rubango family and with Ntabala Chunu, Bukavu, June 2014. See
Appendix A for more detail on the feuds and contestations at the mine.
49 Letter dated 18 October 2011 from the Group of Experts of the Democratic Republic of Congo addressed to
the Chair of the Security Council Committee established pursuant to resolution 1533 (2004), United Nations,
New York, 2011, paragraph 528.
50 The author was only able to visit Mukungwe after obtaining Alexis Rubango’s permission. On arrival at the
site, he was told by people identifying themselves as Rubango’s representatives that he was only being
granted access because Rubango had approved the visit.

33
Chunu denied it, but reportedly told the team that he could not vouch for its safety if it
visited the mine. Kurhengamuzimu’s family also weighed in, saying it would not be correct to
have an important meeting at Mukungwe while they were still in mourning.51

In May 2013, thanks to another initiative by OGP, this time focusing on mines militarisation,
Commander Patrick Masunzu of the 10th military region agreed to order all uniformed troops
under his command out of Mukungwe. The subsequent departure of all uniformed and
armed FARDC troops from the mine was confirmed by a number of respondents during the
fieldwork, though many respondents alleged that the financial stakes of senior military
commanders in gold production in Mukungwe had nonetheless remained firmly in place.

Meanwhile, the national mines ministry team reported back to mines minister Martin
Kabwelulu, who in August 2013 wrote a letter to the provincial government of South Kivu,
(copied to many others including president Joseph Kabila), stating unequivocally that
Mukungwe was wholly situated within Banro’s permit 43. The letter added that the
Rubangos’ and Chunus’ land titles gave them no right to Mukungwe’s minerals, ordered all
artisanal mining on Mukungwe to cease on the grounds that the site had been validated
‘red’, and also ordered all SAESSCAM agents to leave. The letter further requested Banro to
compensate the Rubangos, Chunus and Kurhengamuzimu.52

However, Banro wishes to emphasise that compensation per se is unlikely to happen outside
of Banro's statutory obligation to compensate the holders of surface rights for the
disturbance of structures and agricultural livelihoods, pursuant to the establishment of an
industrial mining operation. Banro cannot set a precedent of buying its own deposit from an
illegally present party. However, Banro does invest resources including the provision of seed
capital, initial technical and planning assistance, and once legal permission can be obtained
to allow ZEAs on parts of industrial permits, Banro will provide access to selected gold
deposits.

In October 2013, Banro met with Tito Kurhengamuzimu, where the chief said that he
accepted that Mukungwe was on the company’s permit. Kurhengamuzimu also said that the
Mushinga groupement was “planning to welcome” Banro.53 In April 2014, OGP held another
workshop on Mukungwe attended by Kurhengamuzimu, Rubango, Chunu, Banro,
representatives of diggers, provincial government officials, the Walungu territorial
administrator and civil society representatives. Everyone present publicly conceded that
Mukungwe did indeed lie in Banro’s permit, and everyone signed an Acte d’Engagement
which included commitments:

 By Banro to help create alternative employment for artisanal miners;

 By Banro to compensate the Chunu and Rubango families;
 By Banro to leave Mukungwe’s diggers active on site while the company carried out
exploration work;

51 Ministry of Mines, Rapport de Mission Effectuee A Bukavu/Sud-Kivu du 03 au 25 Mai 2013, suivant l’ordre de
mission collectif no.046/Cab.Min/Mines/01/2013.
52 Minister of Mines, No.Cab.Min/Mines/01/1062/2013.
53 Banro reports of the meeting, seen by the author.

34
  By the artisanal diggers’ representative to speed up the removal of pregnant women
and children from the mine, and to denounce the presence of any soldiers; and
 By the Chunus, Rubangos and Kurhengamuzimus to find an end to their conflict, to
allow freedom of movement for diggers, to create the conditions for the Chunus’
return, and to keep meeting with each other.

At the time of research, in mid-2014, respondents reported that it was still too early to tell
whether the Acte d’Engagement was being effectively implemented.

35
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mneguidelines.oecd.org/mining.htm